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Reinventing
Your
Business Model

The opportunity to bring a job-to-be-done focus where one does not yet exist

The need to fend off low-end disrupters

The opportunity to capitalize on a brand-new technology by wrapping a new business model around it

The need to respond to a shifting basis of competition. Inevitably, what defines an acceptable solution in a market will change over time, leading core market segments to commoditize

The opportunity to address through disruptive innovation the needs of large groups of potential customers

The Elements of a Successful Business Model

Designing a profit formula

Identifying key resources and processes

How Dow Corning Got Out of Its Own Way

Breaking the rules.

Identifying new competencies

Business Model: A Definition

Consists of four inter- locking elements that, taken together, create and deliver value.

Customer value proposition (CVP)

Profit formula.

Cost structure: direct costs, indirect costs, economies of scale

Revenue model: price × volume

Margin model: given the expected volume and cost structure, the contribu- tion needed from each transaction to achieve desired profits.

Resource velocity: how fast we need to turn over inventory, fixed assets, and other assets – and, overall, how well we need to utilize resources – to sup- port our expected volume and achieve our anticipated profits.